The only real way out: Entrepreneurship

March 29, 2010

Robert Wolcott (left) and Michael Lippitz

— Robert C. Wolcott is the founder and executive director of the Kellogg Innovation Network at Northwestern University. Michael J. Lippitz is the senior research fellow at the Center for Research in Technology & Innovation at Kellogg and a consultant to the federal government. Their book, “Grow From Within: Mastering Corporate Entrepreneurship and Innovation” launched in October. The views expressed are their own. —

The news the U.S. economy grew at a 5.6 percent pace in the fourth quarter – the best showing in years – is tempered by the fact it was fueled by government-supported spending and revving of depleted inventories.

How can America again create quality growth? Though growth appears around the corner, many fear it’s based on governments worldwide flooding markets with liquidity and public spending. To address a crisis born partly of excessive private debt, we’re writing public IOUs to the future. But public largess only buys us time. Eventually, the future will come calling.

There is only one attractive way out: creating new value through innovation and entrepreneurship.

The alternatives—higher taxes or monetizing debt through inflation—won’t provide the jobs and productivity that sustain a rising standard of living. In 1798, Thomas Malthus predicted mass starvation and conflagration: “The power of population is indefinitely greater than the power in the earth to produce subsistence for man.” The world proved Malthusians wrong by vastly increasing agricultural and manufacturing productivity through innovation and entrepreneurship.

Many governments seek to enhance innovation through funding research and development or special initiatives. The recently announced U.S. Department of Commerce Office of Innovation and Entrepreneurship aims to help the U.S. connect “the great ideas to the great company builders,” mostly by supporting small business access to capital and technology.

These types of efforts are helpful, but they’re too narrow. Entrepreneurship is about more than the stereotype of mavericks risking it all to become the next Steve Jobs. We need people across all sectors to become entrepreneurial; empowered to define visions for meaningful change and then make them real. We need to nurture entrepreneurial capabilities and actions within large companies, non-profits and even governments, not just startups.

The good news is that there are enterprises leading the way. In our research over the past six years of entrepreneurial activities at large, established companies, we have seen how companies as diverse as DuPont, IBM, Wawa and Baxter have repeatably built truly new businesses – not just new products or services – that have added billions of dollars of value.

Think about it. The independent entrepreneur fights against the odds to raise credibility and capital, while established companies have the necessary ingredients for new business creation: brands, customers, channels, technologies, people, capital … nearly everything. But large companies often stand in their own way. The focus and efficiencies that make them great often generate mindsets and fiefdoms that protect the old and thwart the new.

Large, established organizations can and do repeatedly generate successful new businesses when executives become truly engaged, creating structures and processes to enable new businesses beyond the core. The approach will be different for different companies, but it can happen in any context.

Nor is entrepreneurship limited to for-profit corporations. People who build new non-profits are entrepreneurial. They have motivating visions and many similar challenges to build their enterprises. In order to have substantial impact, they must discover “business models” that work.

Consider John Wood, founder of Room to Read. While a senior executive at Microsoft, Wood visited local schools during a trek through Nepal. He was inspired by the passion of the students and teachers, but appalled by the paucity of resources. He left Microsoft in 2000 and has since partnered with developing communities to provide schools and libraries for millions of children. His effort is not simply charity. It’s about applying business-guided principles of sustainability, scalability, local ownership, and staff development to create an ongoing enterprise.

The same can happen in government. Richard Boly, a career foreign service officer, had the shocking realization that terrorists and entrepreneurs share many things: commitment to a vision, tireless effort against the odds, and willingness to endure enormous risk. While working for the U.S. embassy in Italy, Boly created a successful program to support local entrepreneurs. Today, various U.S. government entities are exploring how helping build entrepreneurial ecosystems can promote peace and prosperity around the world. When young people find opportunities within the system, they are much less likely to fall for the destructive visions of criminals.

The global economic crisis has provided urgency for change. Without the creation of new enterprises and new value, we will never generate the growth necessary to pay our debts. Without vigorous entrepreneurial activity across sectors, we face stagnation and an inability to sustainably address humanity’s needs. While not everyone will found companies, we need to create the conditions society-wide within which anyone can apply entrepreneurial capabilities to pursue their own unique pursuits of happiness.


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The law of economics says the only thing which is permanent is change and i am from India and hope and pray this century belongs to us just like th 19th belonged to europe and the 20th belonged to united states, i also wish we are lead by clean and efficient second and third rung leaders.

Posted by Ismailtaimur | Report as abusive

This space intentionally left blank. Just like the article preceding it.

Posted by HBC | Report as abusive

Obama should give big tax incentives for this development

Posted by Story_Burn | Report as abusive

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Posted by The Singapore Daily » Blog Archive » Daily SG: 31 Mar 2010 | Report as abusive

In the 50 years since the creation of the mis-named Small Business Administration, it is arguable that there is less entrepreneurial activity than before the government got involved. Now we get the Office of Innovation and Entrepreneurship? Which is different from the SBA how?

The government is as far from entrepreneurship as any entity possible. The very nature of government is antithetical to it. I don’t want my government in the business of risks, passion, dreams, and impossible odds. Stick to protecting me from all threats foreign and domestic.

Posted by ChuckBlakeman | Report as abusive

[…] sides of the same coin,” he noted at an event at the University of California this past April. Both are committed to a vision; both endure enormous risk.  “The difference is […]

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